Mortgage Rate Update March 14, 2012

Mortgage rates are priced worse this morning.

Two Federal Reserve actions hammered interest rates yesterday.  First, in the Fed’s monetary policy statement their tone was less cautious than previous statements.  They also made not mention of further monetary stimulus beyond “Operation Twist” which is set to end June 30th.

Second, the Fed released results from the latest round of bank stress tests which showed that 18 of the largest 19 financial firms in the US have enough capital on its books to withstand another steep downturn.  The milestone clears the way for these firms to begin paying dividends to stockholders and to begin buying back shares.

US stocks soared on these developments yesterday pushing interest rates higher.  From a technical perspective the 10-year Treasury yield has broken through important technical resistance which is a sign that interest rates will likely remain at these levels (or worse) for the immediate term.

About the only catalyst that could bring rates back down to all-time low levels is renewed problems in Europe.  For now, it looks like the Euro-zone is under control so until that changes I expect rates to be .125%-.375% higher than they have been.

Current Outlook: locking